Basically, we had nothing all day across the indexes as everyone waited in anticipation of economic growth news, which ended up coming out worse than expected. In effect, the economy is not doing as well as the economists forecasted, and so the equities markets go up.
Who would have thought?
Headline News
What's really happening is that the economy is cooling off, and that brings hope that the Fed will taper and hike rates less because they see inflation abating.
So what ensues?
Everyone piles in to drive asset prices back up — Humans are masters of their own demise, it seems but [1] We aren't done with inflation quite yet; such systems generally run a more prolonged course and [2] If we are done with inflation, and the economy is heading into a recession, some stocks aren't going to perform so well.
What a mess!
Which appropriately describes how the day played out across many listed assets. The headlines claim it was the most significant one-day rise in two years.
E-mini S&P 500 Index Write-Up
The reality ...
"The market reversion was done in one minute in the premarket to leave retail investors having to work through a choppy gap up and go morning before a late session rally developed to save those still in the game."
Martin Davies | Causal Capital
Question | Bader Alfadhi
In my opinion during the ideal normal bull market, we used to see continuous smooth increase in indexes values 60% to 70% of time vs slightly sharp quick corrections 20% to 30% of time. Now, I think we have the opposite situation.
What's your thoughts on that Martin?
Response | Martin Davies
Bader, I totally agree.
Prior to this year, equities were much easier to trade. Certainly, the last couple of years have been straightforward, and you could have just bought an ETF such as SPY and used tools like Person Pivots http://bit.ly/3fYi12G to keep you in the trade.
These dynamics attracted one-sided, biased rookie traders who went long on everything; all asset classes were simply…